11-14-26: Nvidia CEO Shakeup and Retirement Income

Elizabeth

To the financial hour of the Tom Dupree Show, brought to you by Dupree Financial Group, where we make your money work for you. Joining us this week Michael Dawahare, James Dupree, and here’s our host, Tom Dupree

Tom

So anybody familiar with popular music o- over the last 60 years, uh, this, this is a song c- called California Dreamin’ by The Mamas & Papas. And The Mama was a lady named Cass Elliot. Uh, she’s probably the most famous member of the group. Uh, and she lived in a place called Laurel Canyon, which is where a lot of the musicians of the day lived, and they would all get together and party and have dinner and probably smoke pot. And a lot of music was created out of Laurel Canyon, or let’s put it this way, it was, it was a breeding ground for what we would call the ’60s California sound. And, uh, I can’t think of all the musicians that, that lived there, but there were a bunch.

Michael

All of them.

Tom

Yeah. And if the-

Michael

Crosby, Stills, Nash & Young, the Eagles created their sound there.

Tom

Yeah.

Michael

Clapton hung out there as often as he could.

Tom

Frank Zappa.

Michael

All of them. Frank Zappa and his guitarist, uh, Lowell George, who went on to form Little Feat. It’s endless.

Tom

Do you know that Frank Zappa kicked Lowell George out of his band for doing drugs?

Michael

Right.

Tom

So, uh, he was … Frank Zappa was an interesting guy in his own right, but- He was an

Michael

intellect …

Tom

he was. Towering intellect. Um, okay, so the thing that we, you know, I don’t, I don’t know that we’ve yet woken up to what this means for the biggest driver of markets these days, which is AI and the, the, the trade around it. The, the Mack Daddy in a sense of, of AI, the former president of NVIDIA, uh, is, is now former because- He did some really stupid things. Um, he’s not a stupid person, but, um, he compromised himself with a woman who was a, a Chinese spy. You’ve heard all about it probably. Um, this goes all the way to the White House. Um, it– Since America is trying to maintain its lead in the whole AI industry, uh, and the NVIDIA, um, GPU chips, or whatever you wanna call them, um, were, were paramount to that happening, um, you know, this is, this is a strike through the heart. He, um… Jensen Huang was terminated by the board of NVIDIA, and, um, and now it’s turned out he, he l- he had l- s- sounds like two other affairs. And so he just… I find it really disappointing because I like the guy. It was a success story like you like to hear. I mean, he came to Kentucky at age 13 to, um, a, a place called Oneida Baptist Institute, which is… It’s in the backside of Clay County, which is already in the backside. And, you know, I, I… He had a very unpleasant experience there, but it woke him up, and he, he now gives them quite a bit of money. And, um, but I- I’m kinda speechless about it, so you guys jump in

Michael

Never discount the human element. We’ve, uh, learned that lesson many times, that the boards and the CEOs and the executive team drawing up plans and executing are human beings. And, um, this Jensen had a security detail in the dozens. So he had all sorts of people around him who had, in theory, his safety and security in mind, and yet look what happened.

Tom

So he was basically kind like a little emperor, and they looked the other way when he did stuff like

Michael

that. That, that’s the only conclusion you, you can come to. Uh, and now we’ll get price discovery. The, the company reports earnings Tuesday night. And we’ll see the interim CEO is the current CFO, who came to Nvidia via an acquisition of an Israeli company. And she did not like some of the circular financing. So-

Tom

Well, where, where he’s investing back in these companies that are, uh, that they’re buying-

Michael

That in- … product from … in the dotcom era it was called a Barney deal. I love you, you love me, and you exchange-

Tom

Well, it’s- …

Michael

business with your customers. I-

Tom

It’s what slowed down the Japanese economy. They call it keiretsu over there. Yes,

Michael

right.

Tom

Explain that. The- they … Well, um, a big company like, uh, Mitsubishi or, or Toyota or somebody would invest in their suppliers. And in a sense, that’s dead money when you do that because you’re already doing business with them. It’s … It, it, it, it seems like it’s a wise thing to do. It’s better probably to let the free market … ‘Cause now it’s kind of a fixed market now. You’ve, you’ve basically, um- Done something that looks like good idea, but it isn’t.

Michael

Sure. So for the listener, we’ll throw out some old Wall Street expressions, and some of them get back to the point Elizabeth makes all the time. Uh, do your own research, or if you’re a investment firm, be responsible for doing your own research, because this company is covered by analysts all over the world. It’s tracked by millions of people, and no one knew the story.

Tom

Yeah, that’s crazy.

Michael

Maybe it was unknowable, but it would just go to show you do your own work. Also, the chart- How

Tom

many knew it and didn’t wanna say anything?

Michael

That- that’s out- There was one short seller out with a note on the circular on the, on the, uh, deal with the Singapore company of which this lady in, uh, Asia is caught up, and she worked for them. Uh, but it was also, which we talk about all the time, it was in the charts. Stock hit an all-time high maybe six weeks ago, and then inexplicably started breaking down. So another expression is- And

Tom

the, and the market always knows stuff that is not out there.

Michael

That would be- It,

Tom

it,

Michael

it

Tom

seems like it always

Michael

does … that, that would be true, but then the market’s also forward-looking. The Which I think the listener would wanna know this. The technical behavior of the stock on the capitulation washout yesterday was unprecedented

Tom

Stock got to 148, it l- I saw, and it had been a week and a half earlier at, in the 230s.

Michael

Um- Yes. And so the largest market cap swing in one day, the largest, uh, volume traded in one day, give or take.

Tom

James was saying every 10 cents a share on that stock is $2.4 billion.

Michael

And, and I’ll l- let James hop in next. And two months of options buying occurred yesterday in Nvidia, and most of them, if not virtually all of them, were calls, meaning the market participants believe that stock is going up, which means they don’t believe that the circular financing put the company at risk. They don’t believe Jensen was a spy, think he just did something really stupid. So now the price discovery begins. They report next Tuesday. Their peers then will report over the next six weeks. We’ll see what the regulatory issues are when the new Congress is sworn in. Um, and so if you’re an institutional investor, you are paying super careful attention to what could be a generational opportunity. We don’t know. You gotta stay objective. James?

James

Yeah, and also, I think, I mean, historically, the, I think the stock’s traded around 30 to 40 times, uh, earnings. Um, and they were growing 100%. So in theory, if your company’s growing 100% year over year, you should probably be trading at 100 times earnings. That’s kinda how a earnings multiple works. You pay up for the, um, timely growth. Um, and also, a, a side point on the whole Nvidia thing. Um, so the board voted him out, obviously, and there are five board members that account for about 25,000 shares of stock, which is nothing. And they got a say. Uh, I think one of them was, like, the- They, they

Tom

make more in their board fees than they own in stock

James

Yeah, so the, those And then the key executive members, I forget the guy’s name, but he developed the software called CUDA. There’s a list of about five people that sent in a letter to the board and said, “If you don’t take back Jensen Huang, we’re all gonna go work at Terafab with Elon Musk,” which is, uh, a fab that makes chips and manufactures the chips. That’s, that would be with, uh … I think it might be with Tesla. I don’t think that’s SpaceX, but I might be wrong. Um,

Michael

so-

Tom

You were saying that Jensen Huang is gonna … Huang is-

James

Yeah, he is …

Tom

is gonna go to work for Elon

James

Musk That’s, that’s, that’s the word

Michael

on the street So what we, as a result of what James just said and other things, you’re going to get a ton of volatility over the next weeks as the headlines go back and forth. Um, and let’s just see the news, let the chart resolve itself. Um, if those folks leave and go to Tera, well, the sun’ll come up the next day, and it’s Nvidia’s board and management’s job to execute anyway

Elizabeth

Apparently some of … There’s some online pictures. Some of the employees have placed flowers outside the headquarters out, in front of the Nvidia sign as if someone has died. They’re in mourning.

James

So- No one wants him to go. I mean, he, he was the face of the company. He did all this innovation and he made some risky bets, and all of them paid off. And that’s why he basically took a startup to a $5 trillion company. And, um, you know, who else is, has the ability to do that?

Tom

Nobody. Certainly not the ex-CFO that is now the acting CEO. Why anybody would even imagine that that’s … This guy is one of a kind, and- As, but, but he, he, he-

Elizabeth

He couldn’t stay on, though … he

Tom

made a

Michael

horribly- He could not stay on … fatal flaw. He- He violated, he violated the morals contra- Yeah, yeah … clause of his contract. He had relationships with employees and direct reports.

Tom

Yeah.

Michael

And if you’re publicly traded, the lawsuits are already, you know- Yeah, it’s, it’s- … coming fast and furious. Most of those will get dismissed, but that one would be real if he wasn’t dismissed and had knowingly, openly kind of violated the, h- his contract. That’d be, that’d be something else. So he had no choice. So-

Elizabeth

I would say being investigated by the federal government might be a problem, too.

Michael

It might be. It depends on what they find out. Yeah. It’s also, could also be a clearing event. I kind of like all that hysteria- Yeah … but, you know, Warren Buffett made his fortune buying the fear, which doesn’t mean that’s what should happen now. But, um, think about the, the, another, uh, investing, you know, you know, expression is what’s the news from here? Is it negative, neutral, or positive? The most likely outcome for Nvidia now is neutral to positive, unless the FBI investigation concludes something awful. That’s what market participants do every day.

James

Well, if I was, if I was a client of Nvidia and I had a direct relationship with, uh, Jensen Huang, I, I don’t know if I would wanna continue giving them business because, I mean, look at our business. It’s all based on a relationship. Sure, the service matters, but what starts the entire service? A relationship. So i- it’s hard to say if they’re gonna lose business or not because-

Michael

Right. No one knows. The pushback there would be their products are superior. They have teams out- Yeah, they do have good products … this week fighting hard to keep that from happening. If you are the end user and you’re the engineer in charge of that project, the last thing you want is to change chips. So there’s all sorts of moving parts here, and there’s no reason to guess.

Tom

There are, there’s not a chip you can change to.

Michael

That’s correct.

James

Well, there, there is no- Within

Michael

reason, that’s correct …

James

there is no plan B. I mean, you know, um- I mean, you could go and buy AMD GPUs. I mean, they, they, they got everything. I’m pretty sure they compete with Dell in the server business, too. So I mean, it’s a really fantastic company, AMD. It’s why it trades at 100 times earnings. And it, it, th- that makes no sense to me because Nvidia is a better… was a better company than, uh, than AMD, and it was trading at 20 times earnings. So the market might have known and priced in that risk, and then you got all the retail capitulation, institution capitulation that really didn’t have any clue that this was gonna happen. But the s- really smart money did. Well, there’s a lot of,

Tom

a lot of

James

these people listening to this-

Tom

Uh, sorry about this. I keep hitting this phone.

Elizabeth

You got wandering fingers today.

Tom

Um, um, a lot of people listening to this radio show probably have NVIDIA in their IRAs. They, they, they probably own it. It’s a widely owned stock among retail investors. Yeah, there’s 24 billion shares, man. Yeah. That’s a lot

Michael

of shares. Well, so was Johnson & Johnson when there was a terrible Tylenol tragedy decades ago. A lot of people owned Chipotle when someone may have actually spiked the lettuce and got people sick. Both of those companies roared back. Apple went to a dollar. Amazon went to $5 in the dot com crash. Um-

Tom

Michael, this is different …

Michael

so-

Tom

I beg to dif-

Michael

uh- I, I, I’m not saying it’s, it is or isn’t. Yeah. I’m saying no one knows.

Tom

Right.

Michael

Sit back and watch, um, and let the, let another card come out of the deck. We don’t know.

Tom

Right. So, the, the, the thing that you should do… H- here’s why I can’t invest in NVIDIA. Because everything that you think you know about the company, in order to do a, an, an analysis of it, could be changing. Um, you know, um, if, if you look at their, their businesses and what they do and where they make their money, that could all change. Uh, we don’t know the full ramifications of the CEO leaving because he was an… He was not a caretaker CEO. He was an active investor- The

Elizabeth

face of the brand,

Tom

really … CEO, complete… Well, not only the face of the brand, the guts of the brand.

Michael

I think you hit a key point. Institutional investors, now they have the, they have investment committees, and there’s an analyst and a PM and under, and a… And then it goes all the way up the chain. For the foreseeable future-

Tom

You can’t invest in it …

Michael

yeah, they’re not these- they’re not gonna be pounding the table to add to it. There’s too much risk. Yeah. They don’t, they just don’t know.

Tom

There, there, there are no… I’ll, I’ll bet you, or I’ll guarantee you that 95% of the, uh, volume in the stock is traders. Uh, you know, people d- there… I, I can’t see any institutional investors- I think- … establishing or, or adding to a position …

Michael

in the short term, uh, that’s a point to be respected.

James

Yeah. I think that’s true with the market right now and technology stocks. It… There’s not a lot of buy and hold investors right now because there is so much risk. And whenever, uh, in an environment like this, the characteristics of, of the stocks change. They get more volatile. So you don’t really wanna hold it for long because you, you could- Get underwater quick. So it’s, it’s main- like you said, it’s most of the stocks, I would bet 75% at least are just traders. And

Michael

technology stocks- Well, there’s a difference between ownership and trading. Passive investing, index investing is almost 50% of the S&P. By definition, those don’t trade. The Mag 7 is 45% of the S&P. Those shares, uh, don’t trade. However-

Tom

Yeah, so every S&P 500 ETF or fund, they gotta own X amount of that stock. Right. And it just sits there.

Michael

Right. However, there’s 0DTE, the audience has no idea what I’m talking about. Zero days to expiration. Those are options that are traded every day that don’t exist at 9:30 in the morning and don’t exist at 4:00 PM, and it is a hootenanny from Korea to all over the world every day with these bombs. That’s the stuff you’re seeing on a daily basis. In addition to some institutional investors, professionals would see this news and say, “I’m out. I’ll come back another time.”

Tom

Yeah, they’re not gonna be able to go in and make a, a solid assessment of this company.

Michael

That, to me, that’s the most important point you’re making, is how could you professionally say you could do that right now?

Tom

No, you can’t.

Michael

Right.

Tom

And whether that means you sell your position, some of them probably are.

Michael

Oh, there was some of that, for sure, when the news broke.

Tom

Yeah.

Michael

I’ll just come back and revisit it. That’s a professional approach. There’s nothing wrong with that.

Tom

And it

James

went right into Broadcom and AMD.

Michael

Sure, you had a place to rotate it if you… Which m- if you’re an institutional investor or a hedge fund, you have to have exposure and in- You’re

James

gonna go for those other

Michael

names in many, you, you have to, ’cause you have to have a certain amount of exposure.

Elizabeth

You’ve been listening to The Financial Hour of the Tom Dupree Show, brought to you by Dupree Financial Group, where we make your money work for you. Michael Dawahare, James Dupree, and Tom Dupree have been talking about NVIDIA. And if it’s not a perfect example of why you need to know what you own in your portfolio and why, that’s it. We can help you with that. Give us a call at 859-233-0400. You can also schedule an appointment directly on the homepage of our website at dupreefinancial.com. We’ll be back in just a few minutes with more of The Financial Hour. Stay tuned.

Tom

Hi, this is Tom Dupree at Dupree Financial Group. Imagine that your retirement investment account was managed by a firm that always had your best interests at heart, never charged you commissions, was financially aligned with your interests and not their own, and reported to you on a regular basis in language you could fully understand. If these things sound good to you, you should contact us and have us take a look at your investment portfolio. You might be surprised at how our approach could make a big difference for your retirement investment account. That’s Dupree Financial Group at eight-five-nine, two-three-three-zero-four-hundred and dupreefinancial.com.

Music vocals

Change things will go your way

Elizabeth

Welcome back to the financial hour of the Tom Dupree Show, brought to you by Dupree Financial Group, where we make your money work for you. Joining us, Michael Dawahare, James Dupree, and here’s our host, Tom Dupree.

Tom

Okay, this is, uh, three young ladies in this group, two of which were daughters of Brian Wilson of the Beach Boys. The other one Daughter of John and Michelle Phillips of The Mamas & Papas. And they, they, they were called Wilson Phillips. Uh, I don’t know what they’re doing now, if they’re still in business. But their harmonies were incredible, and, um, they, they kinda got started in the late ’80s. So, uh, uh, from Los Angeles. That’s back when LA Kind of a cool place. I, um, lived in Houston during that time, in earlier ’80s, and went out to LA a few times, and, um, one time I , I rented this big, uh, Lincoln Continental at, uh, LAX Airport in beautiful downtown El Segundo, and, uh, and drove all over town in that Lincoln. Uh, I mean, I went down to Long Beach and out to Pomona, uh, out east. You know, Los Angeles, if you’re flying in there at night, you start seeing city and you think, “Oh, I’m almost there,” and you’re 35 minutes from landing at LAX. 35 minutes. I mean, you’re, you’re already seeing full city. That’s how far east it goes, and then you’re just… ‘Cause, ’cause LAX is right on the lake or the Pacific Ocean. And, uh, I had a great time out there. The first time I ever went was with this buddy of mine from, a guy named Van McCrary from Houston, and we flew out to LAX, rented a car, drove down to Newport Beach, stayed at the, um, what was that place called? It was, it was just a, a motel, but… And we went to the, uh, it was either the Andy Williams or the Tony… It was the Andy Williams Open at, um, a place called, uh, what the hell is that? That, that golf course in La Jolla. Um, anyway, it’s, it’s got the big trees and, and, and stuff, and- It’s

Elizabeth

not Pebble Beach or am I wrong?

Tom

No, it’s not. That’s up near Ca- No … that’s up near San Francisco. It’s in Carmel. Um- I can’t help you well, anyway, the, the, the, the big famous golf course in La Jolla, um, and, uh, which is near San Diego. And, um, I was just… California just blew me away at that time. You, you… Now, interestingly enough, the whole AI, the, the, the whole, uh, business that we’ve been talking about, despite all the impediments that California lays upon businesses, and now they tried to do this billionaire tax, which the people voted down The people voted them, they went blue in droves, and yet they said, “We are not gonna confiscate money from the golden goose, the, the creators of these jobs,” which… But if you, if you look in the Bay Area And just look beyond the human detritus and look at the beauty of the area and, and, and I mean, it makes a hell of a lot of sense that that would be the place that… I guess NVIDIA’s based in California, isn’t it? Oh, yeah. Gotta be. Of course. Yeah. And, and it’s the biggest corporation in the world. There’s trillions of dollars of market cap in California-

Michael

Five. Oh my gosh.

Tom

NVIDIA alone is five trillion … despite the fact that they’ve done everything to run off business, and I think that’s what… In the ’80s it wasn’t that bad. You know, Reagan came from California. Reagan was a very popular polit- maybe the most popular we’ve ever had, more than Trump in many ways. And, uh, I don’t know. I, I, I just Sometimes I feel like I’ve lived too long and seen too much, and then other times I feel like I haven’t seen anything. Michael, take it.

Michael

Well, California’s a … And I don’t … Look, I’m a student. Uh, I study- Yeah, me too … stuff every day. I don’t, I don’t have the answers. I know that Reagan’s amnesty deal in the ’80s permanently changed the political structure of California. I’m not making a value judgment on it. Yeah. I’m not saying it’s good or bad. That’s just the reality. Um, it became sort of a one-party state after that.

Tom

It did.

Michael

Um, and what I’ve learned in the last few weeks is, ’cause we’re … you try and learn every day. Uh, as the Sun Belt does what we want it to do for our investments, which is to industrialize and recruit and build out an economic infrastructure as they bring corporations to their states, they are becoming blue. That is just a, a simple reality. So what’s the new blue? I, I don’t lose a lot of sleep over that personally. Um-

Tom

Well, you’re smart not to …

Michael

I, I don’t. I don’t fear it. Um, I try and stay, uh, politically agnostic as a professional investor and be policy not part, not politics driven. What’s the policy and what’s in the best interest of all sh- stakeholders and shareholders? And, uh, Churchill, I think it was who said, “America goes, does everything wrong until they eventually do get it right.” Some version of that.

Tom

The, the important thing to me is not politics, it’s government. How are we going to, how are we going to govern our- ourselves? What, what, what, what’s gonna be, uh, the, uh, important thing? Now, back to this Jensen Huang thing, they did not govern themselves well.

Michael

Perfields are a great example of corporate governance. They did not have a board chair. That’s-

Tom

Well, the president was. He was the, he was the board chair.

Michael

I think they didn’t have the formal title.

Tom

Maybe not.

Michael

And so there was a lot of sloppy governance.

Tom

So it was kind of just an advisory

Michael

board. Many had been there for

Tom

20 to 30 years. Well, somebody

Michael

was able

Tom

to

Michael

fire him

Tom

because they must’ve, they must’ve gotten a board chair.

Michael

Uh, they did after the fact. And look, no one was in the room. Uh, I, I think maybe ultimately he decided to fire himself or to submit his resignation because if you are having multiple relationships with em- with employees, that’s such an obvious flagrant violation. But that play’s come and gone. Now w- we’ll see, you know, what happens next. And, uh, your point about governance is-

Tom

If a

Michael

person- Now we see …

Tom

if a person- Cannot conduct his or herself well in their personal affairs like that You have to think about their judgment in business.

Michael

You got to, uh, something I think listeners might find interesting why professional investors like meeting in person with management. You want to see how they conduct themselves, their appearance, the manner in which they answer questions, all of it. You w- you want to see that

Tom

The, the, the thing that The thing that does well in investing is y- you’ve talked about price discovery. Price discovery, another way of putting it is a, a search for the truth.

Michael

Sure.

Tom

Um, what is this company truly worth? It w- let’s, let’s make the intrinsic value as best we can line up with the dollar price of where it’s selling. Well, let’s, let’s, let’s make the, the sales price of the stock be close to the intrinsic value of the company. And one of the things you’re doing when, when, when you’re talking to management, it’s a form of price discovery. It, it, it, or value discovery. Absolutely. And, uh, that’s why it’s so important because listen, um, you can throw money around at things and you’ll usually lose it. Um, I’ve done, I, I remember I used to just, I’d like a stock and I’d buy it. I did that this morning and I’m already down, you know. Uh, I bought some Cisco just because I, uh, but I liked the interview with the head guy, but maybe he’s a doofus. I don’t know. He was on CNBC. Um-

Elizabeth

Nothing you hear on this show is a recommendation to buy or sell. Yeah. Please consult a professional- Right … before investing.

Tom

But, but this is what we have to do. It’s a … This is why, and I’m gonna-

Elizabeth

And you bought that just for yourself.

Tom

I’m gonna toot-

Elizabeth

It’s a speculative thing …

Tom

I’m, I’m gonna toot your horn, Michael. You work harder-

James

Don’t do that …

Tom

you work harder than anybody I know in the business at digging into companies. I mean, you, you, you are, you are assiduously-

Michael

Well, that- …

Tom

digging.

Michael

And- That is greatly appreciated, and here’s how timely-

Tom

And you have put me on some good things.

Michael

No, here’s how timely that is. In this week, next week, smart glasses are rolling out.

Tom

Will Warby Parker carry those?

Michael

They’re the, probably the single largest distributor at retail of them.

Tom

And who’s the maker of them?

Michael

Google is the primary one, but there are others.

Tom

So- So it’s not Meta, it’s not

Michael

Meta? No. Oh, they’ve got one too. So what we don’t know, I have no idea, we won’t have to guess. We’ll know after the holidays. Maybe the listener will get a kick out of watching. Are people really gonna buy 300 to $800 glasses that have a camera on the side and can kinda give you, uh, uh, real time- of what’s going on around you as you’re walking down the street. You can’t, they’ve figured out you can’t spy on somebody. You can’t, you can’t be, uh, uh, invade their privacy. But it can give you a snapshot of what’s going on around you. Well, it’s, it’s- If that happens, and I, I’m not gonna prejudge it- Does it have facial

Tom

recognition in

Michael

it, or it’s- No, they have, they have put that genie back in the bottle.

Tom

Yeah.

Michael

That’s what I’m talking about. If that happens, then we’ve got another iPhone on our hands. If people actually really kind of like it. Yeah. That’s happening this week, next week, into the holidays. I’m super curious to see how the American consumer adopts this product. If you’re a school, what do you do if these things get hot?

Elizabeth

So what’s the difference between that and the ones that, um, the Wayfair ones that Apple has?

Michael

I think it’s all part of the same-

Elizabeth

Is there

Michael

very, very similar? … category, but what’s kicking off- Everybody’s

Tom

gonna have their

Michael

own version … what’s kicking off this week is a potentially the breakthrough product. It’s not $2,000. They’re 500-ish or less, and they can do all sorts of cool things as you’re just walking around. So let’s say you wanna take a picture, don’t have to take your cell, your cellphone out anymore. So- Say you want directions. Okay, am I going the right way or wrong way?

Tom

Well, I have no idea- So James- the way they’re being marketed. Uh, I saw an ad- Oh, what’d you see? I don’t … these guys with disabilities that it’s probably a very rare thing, but the guy doesn’t see well, but he sees well enough, and the, the, this phone tells him where he is, what’s on the menu. Okay. I

Michael

think that’s the Apple one. That’s a great example of what we’re talking about. That really makes people’s lives better, which tend- Yeah … to be in consumption the products that go crazy. It ain’t complicated. Does it make your life better? Lululemon made, invented a type of fabric that you didn’t have to take to the dry cleaner and repelled sweat so you didn’t stink. Yeah. That’s , that’s a great product.

James

Right.

Elizabeth

So James, you have experience with the, um, the Apple version. What- No, it- What-

James

It’s the Meta version.

Elizabeth

Okay.

Michael

Well, whatever.

Elizabeth

I’m sorry.

Michael

What, what’s your experience with it?

James

Yeah, that it can take pictures. I got them, like, two years ago, and you could listen to music with them, too But now the Meta glasses are gonna have like a AI agent on them, which is pretty cool.

Elizabeth

Well, and what was interesting, um, is there’s some places that you could not wear those glasses, correct, James? ‘Cause it has a red light on the front to tell you-

James

No, it’s a white light

Elizabeth

Oh, it’s white. To tell

James

that- And it won’t let you, um, record if, if the, uh, light is like… If you put a piece of tape over it, it won’t let you.

Elizabeth

Oh, really?

James

For privacy reasons, yeah.

Elizabeth

So it,

James

it, it- That’s the whole reason it has the light.

Michael

So what’s debuting in the next few weeks are aesthetically much more appealing. They look fashionable, and that’s a great, uh, story you told about the ad. I hadn’t seen that. This is someone whose life is changed- Yeah if this product works.

Tom

I think it’s a very small slice of the population.

Michael

Right, but-

Tom

But anyway, it’s, um- Things are moving fast. Right. And yet in some ways, the, the same old problems that have plagued mankind- Sure.

Michael

Humanity. Yeah. As fast as things are moving, look what Jensen just did.

Tom

It, it hasn’t, it hasn’t really changed. One thing I did wanna talk about before we were done is interest rates, uh, and the bond market. And, uh, we’ve, we’ve seen, uh, a further backup in the price of bonds, meaning the yields have gone a little bit higher, um, given, uh, some of the hot inflation numbers that we’re getting. Um, and, uh, I mean, uh, it’s … A lot of it is the, the, is electronic components which, um, have gone way up. Oil is still high. Food is still high. So, um, I’m not sure the Fed can get this dealt with by just raising interest rates. No.

Michael

Uh,

Tom

I, I, I just don’t think-

Michael

Who knows? Uh, I think you’re- I

Tom

don’t

Michael

think- I think you’re totally right about that. There’s, first of all, get, get oil down. That’s a huge chunk of this. But it’s got nothing to do with whether the Fed rates at 5.25 versus 5.50. I- to me, you’ve hit on probably tied for first with the m- the most important issues into ’27, if you’re a professional investor, is exactly the point you just made. What does inflation do, and what’s the fix? The obvious fix is get oil down. If, if AI’s-

Tom

Yeah, but I don’t even know if that’s gonna fix it right now.

Michael

It’ll take a while. Yeah. For sure.

Tom

It, it’s, it’s-

Michael

We’ve got six months or so. We got a lot of history on when oil spikes. It’s six months-ish- Right … give or take, of, uh, of, uh, bleed through into prices.

Tom

If it’ll move ’em and, and, and get ’em to back up.

Elizabeth

It’s so crazy though, ’cause y- you were talking about how they’re literally having oil storage issues.

Michael

That’s correct.

Elizabeth

But the-

Michael

So much oil is coming out of the, uh, Gulf now and being produced in the Western hemisphere that we’re, let’s just say the number, uh, daily use is 105 million barrels, something like that. What we’re producing now and shipping now, there are storage issues on where to put all the- Yeah extra barrels throughout parts of Southeast Asia this week.

James

I think it’s mostly risk premium in the price of oil because there’s … I mean, Trump, like you said yesterday, he could just blow up all their infrastructure, and then it turbo spikes. So that risk, that risk premium has- Well- … kind of been the, the

Michael

price right now sure. That, that … Well, but that’s been, there’s been a 30 to $50 risk premium a barrel of oil every day since 1979 when Iran fell. Um, and Lloyds of London was more than happy to charge that and then bank those deposits in their banking partners in, in London. That’s been going on a long time. But think about the point Tom just made. A big part of the spike in oil prices is the shipping’s more expensive. The insurance is more expensive. Yeah. All the things Tom’s talking about that have nothing to do with the fed funds rate.

Tom

That’s right. So interest rates may remain high for, for, for quite a while. That’s just the way I look at it.

Elizabeth

So how long’s quite a while? So the oil delay in the oil situation is, say, six months. What is the delay of interest rates when they sort of start-

Tom

Well, it takes something… H- here’s one thing that could make them go down. If the high prices begin to create a recession or- Sure … slowdown in business, if you begin to have a slowdown in business, then, uh, the demand for money starts to- O-

Michael

oddly

Tom

enough- And a slowdown in the AI-

Michael

Okay,

Tom

you’re- need for bonds … you’re, you’re

Michael

kind of getting to it. There hasn’t been, there’s been a lot written about this this year, a meaningful recession in 20-something-ish years since the great financial crisis. And the prevailing thought as to why that is is because it’s been a tech-led economy since about 2010, and they don’t carry inventory.

Tom

That’s right.

Michael

It’s the old economy where the cars would pile up in the parking lot, or the clothes would be stacked up in the shelves, and they had excess inventory to move. That tended to cause recessions. And since about 2010, when the queues took off and tech really exploded with the launch of the iPhone, Amazon really found their footing with e-com. And then in 2022, you got ChatGPT introduced. So we haven’t really had a recession because the new economy doesn’t really stock inventory.

Tom

That’s a good point.

Elizabeth

You’ve been listening to the Financial Hour of the Tom Dupree Show, brought to you by Dupree Financial Group, where we make your money work for you. If you don’t know what you own in your portfolio, you need to. We can help. Give us a call, 859-233-0400. You can also schedule an appointment directly on the homepage of our website at dupreefinancial.com. Thanks for listening to the Financial Hour. It’s gonna make you wanna turn

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